August 30, 2017
US Market Update
After a poor 2016 crop the American volumes will bounce back to around the 40 million pound mark. This is the same level that they were expected to reach in 2016 but due to low availability of water, poor yields and farmers planting more profitable tree crops we saw a 30% decrease across California.
This market will continue to act independently from Chinese in regards to pricing as they have a loyal customer base in their domestic market and also multi nationals that want to avoid any potential peanut allergen issues. We see pricing remaining stable for 2017 providing there isn’t any unfavourable weather conditions in the next few weeks.
The price differential between US and Chinese is going to be significant ($3-4/kgs) and we have limited availability so we will have to be strategic with the customers that we are targeting for this origin.
Chinese Market update
We are in the peak time for garlic dehydration process. Availability of new season material is beginning of October for arrival beginning of November.
A continuous concern is the Chinese government initiative to limit the number of licenses to dehydrators and processors. The government is implementing strict environmental protection measures not only for garlic but also for many other dehydrators such as bell pepper tomato, carrots, etc. These government actions, although well-designed for the long-term benefit of the country’s pollution problem, is causing a short-term supply issues. Many small processing facilities are being closed down while the larger facilities are faced with limitation of production quantities. The decrease in their overall processing capacities is resulting in shortages of stock and sub-sequent late shipments. We are aware of this situation and we continue to monitor it closely.
On the quality side, the market for Chinese garlic remains confronted with the risk of peanut contamination, however, we are continuing the positive release program for peanut allergen and thus we can offer peanut allergen-free Chinese garlic to our customers.
The crop is estimated to be around 15% higher from that of last year and the prices for Chinese garlic have come down on average 8% in comparison to last year’s.